‘If we continue to get growth numbers like this, absent trade policy risks, it’s going to be tougher for the Bank of Canada to avoid rate hikes at some point in the distance.’ – Derek Holt, Scotiabank
The Canadian economy performed better than expected during the March quarter amid strong consumer spending and business investment. Statistics Canada reported on Wednesday that the domestic economy expanded at an annualised pace of 3.7% in the Q2 of 2017, following the preceding quarter’s upwardly revised rate of 2.7% but slightly missing expectations for a 3.9% growth pace. Within March, the economy grew 0.5% after holding steady in February, whereas analysts expected the economy to expand at a 0.3% pace during the reported month. Analysts suggested that the economy’s stronger-than-expected performance would move the Bank of Canada closer to raising interest rates. According to economists, the Bank is set to remain on hold until 2018. Following the release, some analysts revised up their forecasts for Canadian economic growth. According to them, the economy is expected to grow 2.7% this year. Strong GDP growth was mainly driven by higher business investment, which rose 3.7%, and higher consumer spending, which climbed 1.1% during the reported quarter.
